Insurers not making the most of digital technology

Insurers not making the most of digital technology

That’s the finding of a new survey by consultant Willis Towers Watson, released in January.

The New Horizons research surveyed 200 senior-level insurance executives across EMEA, the Americas and Asia. The survey aimed to ‘map the changing attitude of insurers to digital technology and to examine the extent to which companies are using M&A strategies to realise their digitalisation ambitions’.

The findings show that 10% of insurers believe they are ‘significantly behind’ other sectors when it comes to adopting technology. Within the industry, life insurance firms are the most likely to think this – 11% believing they are significantly behind. Health insurers are the most positive about their adoption of digital technologies. 20% of health insurer respondents think that they are ahead of other sectors.

Overall, just 1% of those surveyed believe their company is significantly ahead of other financial sectors, and 10% think they are significantly behind.

Source: Willis Towers Watson

Barriers to digital transformation in insurance

When asked why they were failing to capitalise on the technologies available, ‘complex regulatory requirements’ were cited as the biggest barrier to adoption. 42% of respondents cited this as their most significant obstacle. Perceived customer resistance was the next biggest challenge (cited by 32%), with low frequency of contact between firms and their customers seen as the main disincentive by 22%.

Presumably this relatively low degree of contact means that insurers do not have the same drivers for digital adoption as – say – banks. Customers expect to be able to engage online or via mobiles with their banks. This has led the banking sector to adopt digital methods of communication –apps, texts and user-friendly online services.

Insurers do not face the same degree of pressure to do likewise – although the FCA’s Smarter Consumer Communicationsproject is encouraging firms to take a more engaging approach.

Reluctance to take a lead on digital

74% of insurers questioned believe that the sector is reluctant to show leadership in digital innovation. Perhaps this is due to the high level of regulation they face – adding a layer of complexity to any project. The very public penalties for anyone who fails to meet regulatory requirements may also play a part.

The need to build a business case and get board-level support for your plans

The importance of building a leadership structure that endorses organisation-wide transformation

The benefits of working with other sectors and firms – including so-called fintech ‘disruptors’ – to understand the opportunities and develop your approach

Taking one step at a time towards transformation

So, if you work in insurance, and your firm isn’t yet ready to take a digital approach to customer communications or operations, where do you start?

Automating your marketing workflows is one way of ‘dipping your toe’ into digitalisation without the need for a major communications or operations project. Adopting an automated approach to marketing workflows can: